Section 1.0. UK Retail Sector Landscape, Trends & SWOT Analysis

As retailers are looking beyond the challenges faced in the past two years, it is imperative to capitalize on emerging consumer behavior and advancing shopping experience through technology, innovation, and new business models. The UK Retail sector includes players from various industries, such as entertainment, fashion, food, general merchandise, health & beauty, home, sports & leisure, and technology. As per the Department of International Trade, the UK is pioneering in e-commerce and retail technology as more than £92 billion was generated through online sales in 2021, which is highest in Europe. The Government is actively supporting the UK-based Companies to expand into emerging markets.

According to the British Retail Consortium, Black Friday discounts and increased demand for winter apparels benefitted the retail sales in November 2022. Subsequently, British retail sales surged 4.2% month-on-month; however, sales volume continued to remain lower than the last year due to soaring energy prices and cost-of-living crisis.

Section 1.1. Trends in the Retail Sector

Section 1.2. SWOT Analysis

Section 2.0. Sector Risks & Opportunities

Section 2.1. Risk Exposures to Retail Sector

Section 2.2. Retail Sector Outlook

According to the latest figures from the Office for National Statistics (ONS), the UK retail sales volume surged by 0.6% month-on-month in October 2022, as sales increased in non-food stores, automotive, and non-store retailing verticals. The British Consumer confidence improved in the month of October; however, it remained near record low. The UK Retail sales can be further boosted by the festive season and shopping for Christmas; however, the ongoing cost-of-living crisis and double-digit inflationary pressure can restrict the growth. Moreover, the fall in November’s grocery inflation in the UK could provide a relief ahead of the key Christmas trading period. Going forward, retailers should take advantage of increasing online penetration and smartly leverage a mix of physical and digital touchpoints to induce customers to make purchases.

After gaining insights into Retail sector, we would look at the business model of two relevant players listed on the London Stock Exchange.

Section 3.0. JD Sports Fashion PLC (Buy at GBX 126.45, closing market price of 06 December 2022)

3.1 Company Details

3.2. Key Metrics in Pictures

3.3 Valuation and Technical Guidance

Section 4.0: Currys PLC (Speculative Buy at GBX 71.70, closing price as on 06 December 2022)

4.1 Company Details

4.2. Key Metrics in Pictures

4.3 Valuation and Technical Guidance

Please note markets are trading in a highly volatile zone currently due to certain macro-economic and geopolitical tensions prevailing. Therefore, it is prudent to follow a cautious approach while investing.

Note 1: Past performance is not a reliable indicator of future performance.

Note 2: The reference date for all price data, currency, technical indicators, support, and resistance level is 06 December 2022. The reference data in this report has been partly sourced from REFINITIV.

Note 3: Investment decisions should be made depending on an individual's appetite for upside potential, risks, holding duration, and any previous holdings. An 'Exit' from the stock can be considered if the Target Price mentioned as per the Valuation and or the technical levels provided has been achieved and is subject to the factors discussed above.

Note 4: Target Price refers to a price level which the stock is expected to reach as per the relative valuation method and or technical analysis taking into consideration both short-term and long-term scenarios.

Note 5: ‘Kalkine reports are prepared based on the stock prices captured either from the London Stock Exchange (LSE) and or REFINITIV. Typically, both sources (LSE and or REFINITIV) may reflect stock prices with a delay which could be a lag of 15-20 minutes. There can be no assurance that future results or events will be consistent with the information provided in the report. The information is subject to change without any prior notice.’

Note 6: Dividend Yield may vary as per the stock price movement.

Technical Indicators Defined: -

Support: A level at which the stock prices tend to find support if they are falling, and a downtrend may take a pause backed by demand or buying interest. Support 1 refers to the nearby support level for the stock and if the price breaches the level, then Support 2 may act as the crucial support level for the stock.

Resistance: A level at which the stock prices tend to find resistance when they are rising, and an uptrend may take a pause due to profit booking or selling interest. Resistance 1 refers to the nearby resistance level for the stock and if the price surpasses the level, then Resistance 2 may act as the crucial resistance level for the stock.

Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.

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